Zahid Aa Nanji & 2 others v Exobi (finance House) Limited
The bottom line
#The Court of Appeal dismissed the appeal, upholding injunctions and asset-freezing orders protecting a majority shareholder excluded from a company's management.
What this practically means
#Executive summary
#Key legal issues
#Whether the trial court erred in raising, unilaterally, the question whether the suit was a derivative action
The trial court did raise and deal with an unpleaded issue, but its observation was obiter dictum that had no bearing on the interlocutory orders, so it furnished no ground of appeal.
Neither party pleaded or addressed the derivative-suit question. The trial court analysed section 238 of the Companies Act and observed the respondent could regularise the suit, but the observation formed no part of the disposition. The Court of Appeal adopted Halsbury's definition of dicta and held that, since the observation did not impact the decision to grant the interim or mareva injunctions, the appellants' complaint failed.
Whether the trial court properly exercised its discretion in granting the interim and mareva injunctions
Yes. On largely uncontested facts - the allotment of shares to the directors without notice, the sale of ABC shares to themselves, denial of access to information and non-declaration of dividends - the discretion was properly exercised and the appellate court would not interfere.
Guided by Mbogo v Shah and United India Insurance, the Court found no misdirection, no misapprehension of facts, and no wrong decision. The admitted conduct of the 1st and 2nd appellants disclosed a prima facie case and irreparable harm in the form of diminution of the respondent's shareholding. The conditions for a mareva injunction - jurisdiction, good arguable case, assets within the jurisdiction, risk of dissipation and balance of convenience - were satisfied.
Whether the trial court erred in declining to appoint a receiver and instead ordering appointment of the respondent's representative
No. No receiver was appointed; and the alternative order made in the court's inherent jurisdiction was not premature or an undue interference with the company's affairs.
The trial court considered the parties' arguments and Order 41 rule 1, found the company a going concern and declined to appoint a receiver, leaving the issue open. Expressing an opinion on it now would prejudice its hearing before the trial court. The order for a shareholder representative, made under inherent jurisdiction, was justified by the admitted exclusion of the majority shareholder from the company's management pending trial.
Legal principles established
#- An appellate court will not interfere with a discretionary decision unless the judge misdirected himself in law, misapprehended the facts, took into account matters he should not have, failed to take into account matters he should have, or the decision is plainly wrong; the onus lies on the appellant.
- On an interlocutory appeal, the appellate court must refrain from making concluded views on the matters in contention to avoid prejudicing the pending suit.
- An appeal does not lie from obiter dictum observations of a judge that did not form part of the court's disposition or affect the ultimate decision.
- Conditions for a temporary injunction: prima facie case with probability of success; irreparable injury not compensable by damages; and, if in doubt, balance of convenience.
Court orders
#- 1.Appeal dismissed
- 2.Costs awarded to the respondent against the 1st and 2nd appellants
- On appeal from
- High Court
- not stated in judgment
- Jurisdiction invoked
- First appellate jurisdiction over an interlocutory appeal from the High Court (statutory basis not expressly stated in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Zahid Aa Nanji & 2 others v Exobi (finance House) Limited", Case Analysis (2025). Civil Appeal (interlocutory appeal from High Court, memorandum of appeal dated 6th November 2020). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/1119/eng@2025-06-20
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.